UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
______ ______
Commission File Number 1-2256
EXXON MOBIL CORPORATION
________________________________________________________
(Exact name of registrant as specified in its charter)
NEW JERSEY 13-5409005
______________________________ ______________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5959 Las Colinas Boulevard, Irving, Texas 75039-2298
________________________________________________________________
(Address of principal executive offices) (Zip Code)
(972) 444-1000
______________________________________________________
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
___ ___
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding as of March 31, 2000
_______________________________ ________________________________
Common stock, without par value 3,481,126,588
<PAGE>
EXXON MOBIL CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
TABLE OF CONTENTS
Page
Number
______
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statement of Income 3
Three months ended March 31, 2000 and 1999
Condensed Consolidated Balance Sheet 4
As of March 31, 2000 and December 31, 1999
Condensed Consolidated Statement of Cash Flows 5
Three months ended March 31, 2000 and 1999
Notes to Condensed Consolidated Financial Statements 6-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-15
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 6. Exhibits and Reports on Form 8-K 16
Signature 17
<PAGE> -2-
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(millions of dollars)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
__________________
2000 1999
<S> ______ ______
REVENUE <C> <C>
Sales and other operating revenue,
including excise taxes $53,273 $37,982
Earnings from equity interests and other revenue 808 700
_______ _______
Total revenue 54,081 38,682
_______ _______
COSTS AND OTHER DEDUCTIONS
Crude oil and product purchases 24,964 13,909
Operating expenses 4,285 4,143
Selling, general and administrative expenses 2,877 3,244
Depreciation and depletion 2,128 2,171
Exploration expenses, including dry holes 210 242
Merger related expenses 530 7
Interest expense 174 182
Excise taxes 5,493 4,878
Other taxes and duties 8,082 8,220
Income applicable to minority and preferred interests 72 9
_______ _______
Total costs and other deductions 48,815 37,005
_______ _______
INCOME BEFORE INCOME TAXES 5,266 1,677
Income taxes 2,241 193
_______ _______
INCOME BEFORE EXTRAORDINARY ITEM 3,025 1,484
Extraordinary gain from required asset divestitures,
net of income tax 455 0
_______ _______
NET INCOME $ 3,480 $ 1,484
======= =======
NET INCOME PER COMMON SHARE (DOLLARS)
Before extraordinary item $ 0.87 $ 0.42
Extraordinary gain, net of income tax 0.13 0.00
_______ _______
Net income $ 1.00 $ 0.42
======= =======
NET INCOME PER COMMON SHARE
- ASSUMING DILUTION (DOLLARS)
Before extraordinary item $ 0.86 $ 0.42
Extraordinary gain, net of income tax 0.13 0.00
_______ _______
Net income $ 0.99 $ 0.42
======= =======
Dividends per common share $ 0.44 $ 0.42
</TABLE>
<PAGE> -3-
EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(millions of dollars)
<TABLE>
<CAPTION> March 31, Dec. 31,
2000 1999
<S> ________ ________
ASSETS <C> <C>
Current assets
Cash and cash equivalents $ 2,928 $ 1,688
Other marketable securities 57 73
Notes and accounts receivable - net 19,083 19,155
Inventories
Crude oil, products and merchandise 7,046 7,370
Materials and supplies 1,138 1,122
Prepaid taxes and expenses 2,128 1,733
________ ________
Total current assets 32,380 31,141
Property, plant and equipment - net 92,553 94,043
Investments and other assets 18,305 19,337
________ ________
TOTAL ASSETS $143,238 $144,521
======== ========
LIABILITIES
Current liabilities
Notes and loans payable $ 7,370 $ 10,570
Accounts payable and accrued liabilities 25,631 25,492
Income taxes payable 4,220 2,671
________ ________
Total current liabilities 37,221 38,733
Long-term debt 8,009 8,402
Annuity reserves, deferred credits and other liabilities 33,403 33,920
________ ________
TOTAL LIABILITIES 78,633 81,055
________ ________
SHAREHOLDERS' EQUITY
Benefit plan related balances (282) (298)
Common stock, without par value:
Authorized: 4,500 million shares
Issued: 4,010 million shares 3,461 3,403
Earnings reinvested 77,004 75,055
Accumulated other nonowner changes in equity
Cumulative foreign exchange translation adjustment (3,267) (2,300)
Minimum pension liability adjustment (299) (299)
Unrealized gains on stock investments 37 31
Common stock held in treasury:
529 million shares at Mar. 31, 2000 (12,049)
533 million shares at Dec. 31, 1999 (12,126)
________ ________
TOTAL SHAREHOLDERS' EQUITY 64,605 63,466
________ ________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $143,238 $144,521
======== ========
</TABLE>
The number of shares of common stock issued and outstanding at March 31,
2000 and December 31, 1999 were 3,481,126,588 and 3,477,423,323,
respectively.
<PAGE> -4-
EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(millions of dollars)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
__________________
2000 1999
______ ________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 3,480 $ 1,484
Depreciation and depletion 2,128 2,171
Changes in operational working capital, excluding cash
and debt 1,830 110
All other items - net (1,948) (705)
_______ _______
Net cash provided by operating activities 5,490 3,060
_______ _______
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (1,769) (2,657)
Sales of subsidiaries and property, plant and equipment 1,982 234
Other investing activities - net 645 122
_______ _______
Net cash provided by/(used in) investing activities 858 (2,301)
_______ _______
NET CASH GENERATION BEFORE FINANCING ACTIVITIES 6,348 759
_______ _______
CASH FLOWS FROM FINANCING ACTIVITIES
Additions to long-term debt 85 337
Reductions in long-term debt (282) (70)
Additions/(reductions) in short-term debt - net (3,334) 522
Cash dividends to ExxonMobil shareholders (1,531) (1,455)
Cash dividends to minority interests (63) (60)
Changes in minority interests and sales/(purchases)
of affiliate stock (42) (7)
Net ExxonMobil shares sold/(acquired) 109 (77)
_______ _______
Net cash used in financing activities (5,058) (810)
_______ _______
Effects of exchange rate changes on cash (50) (4)
_______ _______
Increase/(decrease) in cash and cash equivalents 1,240 (55)
Cash and cash equivalents at beginning of period 1,688 2,386
_______ _______
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,928 $ 2,331
======= =======
SUPPLEMENTAL DISCLOSURES
Income taxes paid $ 974 $ 650
Cash interest paid $ 225 $ 177
</TABLE>
<PAGE> -5-
EXXON MOBIL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis Of Financial Statement Preparation
These unaudited condensed consolidated financial statements should be
read in the context of the consolidated financial statements and notes
thereto filed with the Securities and Exchange Commission in the
corporation's 1999 Annual Report on Form 10-K. In the opinion of the
corporation, the information furnished herein reflects all known
accruals and adjustments necessary for a fair statement of the results
for the periods reported herein. All such adjustments are of a normal
recurring nature. The corporation's exploration and production
activities are accounted for under the "successful efforts" method.
2. Recently Issued Statements of Financial Accounting Standards
In June 1998, the Financial Accounting Standards Board released Statement
No. 133, "Accounting for Derivative Instruments and Hedging Activities
Information." As amended by Statement No. 137 issued in June 1999, this
statement, which must be adopted beginning no later than January 1, 2001
for calendar year companies such as the corporation, establishes
accounting and reporting standards for derivative instruments. The
statement requires that an entity recognize all derivatives as either
assets or liabilities in the financial statements and measure those
instruments at fair value, and it defines the accounting for changes in
the fair value of the derivatives depending on the intended use of the
derivative. Adoption of this statement is not expected to have a material
effect upon the corporation's operations or financial condition.
3. Merger of Exxon Corporation and Mobil Corporation
On November 30, 1999, a wholly-owned subsidiary of Exxon Corporation
merged with Mobil Corporation so that Mobil became a wholly-owned
subsidiary of Exxon (the "Merger"). At the same time, Exxon changed its
name to Exxon Mobil Corporation.
As a result of the Merger, the accounts of certain refining, marketing and
chemicals operations jointly controlled by the combining companies have
been included in the consolidated financial statements. These operations
were previously accounted for by Exxon and Mobil as separate companies
using the equity method of accounting.
The Merger was accounted for as a pooling of interests. Accordingly, the
consolidated financial statements give retroactive effect to the merger,
with all periods presented as if Exxon and Mobil had always been combined.
<PAGE> -6-
In the first quarter of 2000, in association with the Merger, $530 million
before tax ($325 million after tax) of costs were recorded as merger
related expenses. Charges included separation expenses of approximately
$420 million related to workforce reductions (for an additional 2,200
employees) plus other merger implementation costs. During the quarter,
1,150 employees actually separated and were paid pursuant to the severance
plan. The reserve balance at the end of the period, primarily related to
severance expenses, is expected to be expended in 2000 and 2001. The
following table summarizes the activity in the reorganization reserve for
the quarter ended March 31, 2000:
Opening Balance at
Balance Additions Deductions Period End
_______ _________ __________ __________
(millions of dollars)
330 450 145 635
4. Extraordinary Gains on Required Asset Divestitures
First quarter 2000 results included a net after tax gain of $455 million
(net of $549 million of income taxes), or $0.13 per common share, from
asset divestments that were required as a condition of the regulatory
approval of the Merger. First quarter divestments included some U.S. fuels
marketing assets of former Exxon and former Mobil, Mobil's interest in a
European fuels joint venture with British Petroleum and Mobil's interest in
the German fuels joint marketing venture Aral. This net gain on required
divestments was reported as an extraordinary item according to accounting
requirements for business combinations accounted for as a pooling of
interests.
5. Litigation and Other Contingencies
A number of lawsuits, including class actions, were brought in various
courts against the corporation and certain of its subsidiaries relating to
the accidental release of crude oil from the tanker Exxon Valdez in 1989.
Essentially all of these lawsuits have now been resolved or are subject to
appeal.
On September 24, 1996, the United States District Court for the District
of Alaska entered a judgment in the amount of $5.058 billion in the Exxon
Valdez civil trial that began in May 1994. The District Court awarded
approximately $19.6 million in compensatory damages to fisher plaintiffs,
$38 million in prejudgment interest on the compensatory damages and
$5 billion in punitive damages to a class composed of all persons and
entities who asserted claims for punitive damages from the corporation as
a result of the Exxon Valdez grounding. The District Court also ordered
that these awards shall bear interest from and after entry of the
judgment. The District Court stayed execution on the judgment pending
appeal based on a $6.75 billion letter of credit posted by the
corporation. The corporation has appealed the judgment. The corporation
has also appealed the District Court's denial of its renewed motion for a
new trial. The United States Court of Appeals for the Ninth Circuit heard
oral arguments on the appeals on May 3, 1999. In March 2000, the Ninth
Circuit ruled solely on the issue of the corporation's renewed motion for
a new trial upholding the District Court's denial of the motion. The
corporation continues to believe that the punitive damages in this case
are unwarranted and that the judgment should be set aside or substantially
reduced by the appellate courts.
<PAGE> -7-
On January 29, 1997, a settlement agreement was concluded resolving all
remaining matters between the corporation and various insurers arising
from the Valdez accident. Under terms of this settlement, the corporation
received $480 million. Final income statement recognition of this
settlement continues to be deferred in view of uncertainty regarding the
ultimate cost to the corporation of the Valdez accident.
The ultimate cost to the corporation from the lawsuits arising from the
Exxon Valdez grounding is not possible to predict and may not be resolved
for a number of years.
Under the October 8, 1991, civil agreement and consent decrees with the
U.S. and Alaska governments, the corporation has made annual payments
since 1991, which in each of the years 1999, 1998, and 1997, were
$70 million. These payments were charged against the provision that was
previously established to cover the costs of the settlement.
German and Dutch affiliated companies are the concessionaires of a natural
gas field subject to a treaty between the governments of Germany and the
Netherlands under which the gas reserves in an undefined border or common
area are to be shared equally. Entitlement to the reserves is determined
by calculating the amount of gas which can be recovered from this area.
Based on the final reserve determination, the German affiliate has
received more gas than its entitlement. Arbitration proceedings, as
provided in the agreements, were conducted to resolve issues concerning
the compensation for the overlifted gas.
By final award dated July 2, 1999, preceded by an interim award in 1996,
an arbitral tribunal established the full amount of the compensation for
the excess gas. This amount has now been paid, but the Dutch affiliate is
seeking to have the award set aside. Other substantive matters remain
outstanding, including recovery of royalties paid on such excess gas and
the taxes payable on the final compensation amount. The ultimate outcome
is not expected to have a materially adverse effect upon the corporation's
operations or financial condition.
The U.S. Tax Court has decided the issue with respect to the pricing of
crude oil purchased from Saudi Arabia for the years 1979-1981 in favor of
the corporation. This decision is subject to appeal. Certain other issues
for the years 1979-1988 remain pending before the Tax Court. The ultimate
resolution of these issues is not expected to have a materially adverse
effect upon the corporation's operations or financial condition.
Claims for substantial amounts have been made against the corporation and
certain of its consolidated subsidiaries in other pending lawsuits, the
outcome of which is not expected to have a materially adverse effect upon
the corporation's operations or financial condition.
The corporation and certain of its consolidated subsidiaries are directly
and indirectly contingently liable for amounts similar to those at the
prior year-end relating to guarantees for notes, loans and performance
under contracts, including guarantees of non-U.S. excise taxes and customs
duties of other companies, entered into as a normal business practice,
under reciprocal arrangements.
Additionally, the corporation and its affiliates have numerous long-term
sales and purchase commitments in their various business activities, all
of which are expected to be fulfilled with no adverse consequences
material to the corporation's operations or financial condition.
<PAGE> -8-
The operations and earnings of the corporation and its affiliates
throughout the world have been, and may in the future be, affected from
time to time in varying degree by political developments and laws and
regulations, such as forced divestiture of assets; restrictions on
production, imports and exports; price controls; tax increases and
retroactive tax claims; expropriation of property; cancellation of
contract rights and environmental regulations. Both the likelihood of such
occurrences and their overall effect upon the corporation vary greatly
from country to country and are not predictable.
6. Nonowner Changes in Shareholders' Equity
The total nonowner changes in shareholders' equity for the three months
ended March 31, 2000 and 1999 were $2,519 million and $666 million,
respectively. Total nonowner changes in shareholders' equity include net
income and the change in the cumulative foreign exchange translation
adjustment, the minimum pension liability adjustment and the unrealized
gains on stock investments components of shareholders' equity.
7. Earnings Per Share
<TABLE>
<CAPTION> Three Months Ended
March 31,
__________________
2000 1999
<S> ______ ______
NET INCOME PER COMMON SHARE <C> <C>
Income before extraordinary item (millions of dollars) $3,025 $1,484
Less: Preferred stock dividends 0 (14)
______ ______
Income available to common shares $3,025 $1,470
====== ======
Weighted average number of common shares
outstanding (millions of shares) 3,478 3,449
Net income per common share (dollars)
Before extraordinary item $ 0.87 $ 0.42
Extraordinary gain, net of income tax 0.13 0.00
______ ______
Net income $ 1.00 $ 0.42
====== ======
NET INCOME PER COMMON SHARE - ASSUMING DILUTION
Income before extraordinary item (millions of dollars) $3,025 $1,484
Adjustment for assumed dilution 2 (1)
______ ______
Income available to common shares $3,027 $1,483
====== ======
Weighted average number of common shares
outstanding (millions of shares) 3,478 3,449
Plus: Issued on assumed exercise of stock options 44 42
Plus: Assumed conversion of preferred stock 0 25
______ ______
Weighted average number of common shares outstanding 3,522 3,516
====== ======
Net income per common share
- assuming dilution (dollars)
Before extraordinary item $ 0.86 $ 0.42
Extraordinary gain, net of income tax 0.13 0.00
______ ______
Net income $ 0.99 $ 0.42
====== ======
</TABLE>
<PAGE> -9-
8. Disclosures about Segments and Related Information
<TABLE>
<CAPTION>
Three Months Ended
March 31,
___________________
2000 1999
_______ _______
<S> <C> <C>
(millions of dollars)
EARNINGS AFTER INCOME TAX
(Before extraordinary items)
Upstream
United States $ 880 $ 159
Non-U.S. 1,874 633
Downstream
United States 182 62
Non-U.S. 187 355
Chemicals
United States 181 140
Non-U.S. 139 171
All Other (418) (36)
_______ _______
Corporate Total $ 3,025 $ 1,484
======= =======
SALES AND OTHER OPERATING REVENUE
Upstream
United States $ 996 $ 614
Non-U.S. 3,803 2,734
Downstream
United States 13,017 7,908
Non-U.S. 31,092 23,608
Chemicals
United States 1,969 1,405
Non-U.S. 2,170 1,511
All Other 226 202
_______ _______
Corporate Total $53,273 $37,982
======= =======
INTERSEGMENT REVENUE
Upstream
United States $ 1,481 $ 649
Non-U.S. 3,715 1,422
Downstream
United States 873 346
Non-U.S. 1,921 1,090
Chemicals
United States 582 354
Non-U.S. 446 264
All Other 174 155
</TABLE>
<PAGE> -10-
EXXON MOBIL CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
FUNCTIONAL EARNINGS SUMMARY
<TABLE>
<CAPTION> First Quarter
_____________________
2000 1999
______ ______
<S> <C> <C>
(millions of dollars)
Earnings including merger effects and special items
___________________________________________________
Exploration and production
United States $ 880 $ 159
Non-U.S. 1,874 633
Refining and marketing
United States 182 62
Non-U.S. 187 355
Chemicals
United States 181 140
Non-U.S. 139 171
Other operations 119 97
Corporate and financing (212) (126)
Merger expenses (325) (7)
Gain on required asset divestitures 455 0
______ ______
NET INCOME $3,480 $1,484
====== ======
Net income per common share $ 1.00 $ 0.42
Net income per common share
- assuming dilution $ 0.99 $ 0.42
Merger effects and special items
________________________________
Refining and marketing
Non-U.S. $ 0 $ (120)
Merger expenses (325) (7)
Gain on required asset divestitures 455 0
______ ______
TOTAL $ 130 $ (127)
====== ======
Earnings excluding merger effects and special items
___________________________________________________
Exploration and production
United States $ 880 $ 159
Non-U.S. 1,874 633
Refining and marketing
United States 182 62
Non-U.S. 187 475
Chemicals
United States 181 140
Non-U.S. 139 171
Other operations 119 97
Corporate and financing (212) (126)
______ ______
TOTAL $3,350 $1,611
====== ======
Earnings per common share $ 0.96 $ 0.46
Earnings per common share
- assuming dilution $ 0.95 $ 0.46
</TABLE>
<PAGE> -11-
FIRST QUARTER 2000 COMPARED WITH FIRST QUARTER 1999
Exxon Mobil Corporation reported record quarterly results. Excluding merger
effects and special items, estimated first quarter 2000 earnings of $3,350
million ($0.95 per share) increased $1,739 million (108 percent) from the first
quarter of last year. Including net favorable merger effects of $130 million,
estimated net income of $3,480 million ($0.99 per share) increased $1,996
million (135 percent).
ExxonMobil's first full quarter of combined operations produced record results.
First quarter 2000 earnings of $3,350 million excluding merger expenses and
gains on regulatory divestitures were up $1,739 million or 108 percent from the
prior year, and represented a quarterly record. Net income was up $1,996
million or 135 percent to $3,480 million, also a quarterly record. Upstream
earnings were $2.8 billion and represented a second consecutive record quarter.
Upstream results benefited from higher crude oil prices, which were up over $15
per barrel from the first quarter of 1999. Production, on an oil equivalent
basis, was up 3 percent, mainly reflecting higher natural gas volumes in most
geographic areas. Higher natural gas prices also contributed to improved
upstream earnings.
Downstream earnings were lower than last year, reflecting the inability to
raise product prices in line with rising crude costs. Weaker margins in most
markets were partly offset by lower turnaround costs and lower operating
expenses. As crude oil prices declined near the end of the first quarter,
downstream margins improved sharply. This favorable trend has continued into
the second quarter.
Chemicals earnings improved from the prior year as a result of record first
quarter sales volumes and improved commodity prices which more than offset the
impact of rising feedstock costs. Earnings from other operations also improved
due to higher copper prices and volumes.
During the quarter, ExxonMobil continued its active investment program,
spending $2.2 billion on capital and exploration projects. Spending was below
last year's level due to the completion of several major projects, but is
expected to ramp up over the remainder of the year.
OTHER COMMENTS ON FIRST QUARTER COMPARISON
Upstream earnings benefited from rising crude oil prices, that averaged over
$15 per barrel more than the first quarter of 1999. Worldwide average natural
gas realizations were about 27 percent higher. Lower exploration expenses also
benefited upstream results.
Liquids production increased 22 kbd (thousands of barrels per day) or 1 percent
to 2,562 kbd, reflecting a first full quarter of production from the Balder and
Jotun developments in Norway and the Cerro Negro development in Venezuela and
increased production from eastern Canada. These increases more than offset the
effects of natural field declines and lower entitlements in other areas. First
quarter natural gas production of 12,185 mcfd (millions of cubic feet per day)
was up 669 mcfd or 6 percent from the prior year, due to higher production in
North America, Europe, Malaysia and Qatar, partly offset by lower Indonesian
volumes.
<PAGE> -12
Earnings from U.S. upstream operations were $880 million, an increase of
$721 million from the prior year. Outside the U.S., upstream earnings were
$1,874 million, an increase of $1,241 million from the first quarter of 1999.
Downstream earnings declined as petroleum product prices were not able to keep
up with the increase in crude costs during the quarter. Downstream results were
also adversely affected by unfavorable foreign exchange effects. These effects
were partly offset by lower turnaround costs and lower operating expenses.
Petroleum product sales were 7,803 kbd compared to 8,974 kbd in the prior
year's first quarter. The reduction was mainly due to the regulatory
divestiture of Mobil's European fuels joint venture and lower supply sales in
Asia-Pacific as a result of the low margin environment.
U.S. downstream earnings were $182 million, up $120 million from the prior year
as the result of lower turnaround impacts, improved operating performance and
lower operating expenses. Outside of the U.S., lower margins and unfavorable
foreign exchange effects reduced downstream earnings to $187 million, a
decrease of $288 million from 1999, after excluding last year's Japanese
restructuring charge.
Chemicals earnings were $320 million compared with $311 million in the same
quarter a year ago. Margins improved slightly as increased product prices were
offset by higher feedstock costs. Prime product sales volumes of 6,441 kt
(thousands of metric tons) were 565 kt or 10 percent higher than the same
period a year ago. These benefits were partly reduced by unfavorable foreign
exchange effects.
Earnings from other operations, including coal, minerals and power, totaled
$119 million, compared with $97 million in the first quarter of 1999. Earnings
improved on higher copper prices and volumes, partly offset by lower coal
prices.
Corporate and financing expenses of $212 million compared with $126 million in
the first quarter of 1999. Higher interest rates and lower tax-related benefits
drove the increase. During the period, the company's operating segments
continued to benefit from recent reductions in the tax rates of several
countries and the favorable resolution of tax-related issues.
MERGER OF EXXON CORPORATION AND MOBIL CORPORATION
On November 30, 1999, a wholly-owned subsidiary of Exxon Corporation merged
with Mobil Corporation so that Mobil became a wholly-owned subsidiary of Exxon
(the "Merger"). At the same time, Exxon changed its name to Exxon Mobil
Corporation.
As a result of the Merger, the accounts of certain refining, marketing and
chemicals operations jointly controlled by the combining companies have been
included in the consolidated financial statements. These operations were
previously accounted for by Exxon and Mobil as separate companies using the
equity method of accounting.
The Merger was accounted for as a pooling of interests. Accordingly, the
consolidated financial statements give retroactive effect to the merger, with
all periods presented as if Exxon and Mobil had always been combined.
<PAGE> -13-
In the first quarter of 2000, in association with the Merger, $530 million
before tax ($325 million after tax) of costs were recorded as merger related
expenses. Charges included separation expenses of approximately $420 million
related to workforce reductions (for an additional 2,200 employees) plus other
merger implementation costs. During the quarter, 1,150 employees actually
separated and were paid pursuant to the severance plan. The reserve balance at
the end of the period, primarily related to severance expenses, is expected to
be expended in 2000 and 2001. The following table summarizes the activity in
the reorganization reserve for the quarter ended March 31, 2000:
Opening Balance at
Balance Additions Deductions Period End
_______ _________ __________ __________
(millions of dollars)
330 450 145 635
Merger related expenses are expected to grow to approximately $2.5 billion
before tax on a cumulative basis by 2002. Pre-tax operating synergies
associated with the Merger, including cost savings and efficiency gains, are
expected to reach $3.8 billion per year by 2002. Merger synergy initiatives are
on track and the rate of benefit capture is expected to increase as the year
progresses.
Certain property -- primarily refining, marketing, pipeline and natural gas
distribution assets -- must be divested as a condition of the regulatory
approval of the Merger by the U.S. Federal Trade Commission and the European
Commission. First quarter 2000 results included a net after tax gain of $455
million (net of $549 million of income taxes), or $0.13 per common share, from
asset divestments that were required as a condition of the regulatory approval
of the ExxonMobil merger. First quarter divestments included some U.S. fuels
marketing assets of former Exxon and former Mobil, Mobil's interest in a
European fuels joint venture with British Petroleum and Mobil's interest in the
German fuels joint marketing venture Aral. This net gain on required
divestments was reported as an extraordinary item according to accounting
requirements for business combinations accounted for as a pooling of interests.
Further required divestments will occur during the remainder of the year and
are also expected to result in a net gain.
LIQUIDITY AND CAPITAL RESOURCES
Net cash generation before financing activities was $6,348 million in the first
three months of 2000 versus $759 million in the same period last year.
Operating activities provided net cash of $5,490 million, an increase of $2,430
million from the prior year, influenced by higher net income. Investing
activities provided net cash of $858 million, compared to a use of cash of
$2,301 million in the prior year, reflecting lower additions to property,
plant, and equipment and the proceeds from the asset divestments that were
required as a condition of regulatory approval of the merger.
Net cash used in financing activities was $5,058 million in the first quarter
of 2000 versus $810 million in the same quarter last year. The increase was
driven by debt reductions in the current year period versus debt increases last
year.
Prior to the merger, the corporation purchased shares of its common stock for
the treasury to offset shares issued in conjunction with company benefit plans
and programs. Consistent with pooling accounting requirements, this repurchase
program was suspended effective with the close of the ExxonMobil merger on
November 30, 1999.
<PAGE> -14-
Revenue for the first quarter of 2000 totaled $54,081 million compared to
$38,682 million in the first quarter 1999.
Capital and exploration expenditures were $2,224 million in the first quarter
2000 compared to $3,354 million in last year's first quarter.
Total debt of $15.4 billion at March 31, 2000 decreased $3.6 billion from
year-end 1999. The corporation's debt to total capital ratio was 18.4 percent
at the end of the first quarter of 2000, compared to 22.0 percent at year-end
1999.
Over the twelve months ended March 31, 2000, return on average shareholders'
equity was 15.7 percent. Return on average capital employed, which includes
debt, was 12.6 percent over the same time period.
Although the corporation issues long-term debt from time to time and
maintains a revolving commercial paper program, internally generated funds
cover the majority of its financial requirements.
Litigation and other contingencies are discussed in note 5 to the unaudited
condensed consolidated financial statements. There are no events or
uncertainties known to management beyond those already included in reported
financial information that would indicate a material change in future
operating results or future financial condition.
The corporation, as part of its ongoing asset management program, continues
to evaluate its mix of assets for potential upgrade. Because of the ongoing
nature of this program, dispositions will continue to be made from time to
time, within the constraints of pooling of interests accounting, which will
result in either gains or losses.
FORWARD-LOOKING STATEMENTS
Statements in this discussion regarding expectations, plans and future
events or conditions are forward-looking statements. Actual future
results, including synergy benefits from the merger; asset divestment
proceeds; financing sources; the resolution of contingencies; the effect
of changes in prices, interest rates and other market conditions; and
environmental and capital expenditures could differ materially depending
on a number of factors. These factors include management's ability to
implement merger plans successfully and on schedule; the outcome of
commercial negotiations; and other factors discussed above and in Item 1
of ExxonMobil's most recent Annual Report on Form 10-K.
<PAGE> -15-
EXXON MOBIL CORPORATION
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Information about market risks for the three months ended
March 31, 2000 does not differ materially from that discussed
under Item 7A of the registrant's Annual Report on Form 10-K
for 1999.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Misdemeanor charges (three on December 10, 1999 and four on
March 20, 2000) have been filed on information against Exxon
Pipeline Company alleging water pollution caused by pipeline
leaks in Harris County, Texas, in violation of the Texas Water
Code. The seven cases have been consolidated for prosecution by
the Harris County District Attorney in Harris County Criminal
Court at Law #15. The State is seeking a total penalty of
$700,000. Discussions with the District Attorney's office are
on-going.
Refer to the relevant portions of Note 5 on pages 7 through 9 of
this Quarterly Report on Form 10-Q for further information on
legal proceedings.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit 27 - Financial Data Schedule (included only in the
electronic filing of this document).
b) Reports on Form 8-K
On February 11, 2000, the registrant filed an amendment of its
Current Report on Form 8-K filed on December 1, 1999, to include
financial statements of businesses acquired and pro forma financial
information in accordance with Item 7.
<PAGE> -16-
EXXON MOBIL CORPORATION
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EXXON MOBIL CORPORATION
Date: May 12, 2000
/s/ DONALD D. HUMPHREYS
_______________________________________________
Donald D. Humphreys, Vice President, Controller
and Principal Accounting Officer
<PAGE> -17
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THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EXXONMOBIL'S
CONDENSED CONSOLIDATED BALANCE SHEET AT 3/31/00 AND EXXONMOBIL'S CONDENSED
CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED 3/31/00, THAT ARE
CONTAINED IN EXXONMOBIL'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED 3/31/00. THE
SCHEDULE IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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